SA loses out on Trump's steel tariff exemption

The US has not granted South Africa an exemption on its increased steel and aluminium tariffs, this after the department of trade and industry (DTI) made representations to the US government.

The DTI issued a statement expressing its disappointment on the matter on Monday, following a teleconference between Trade and Industry Minister Rob Davies and US Ambassador CJ Mahoney.

US President Donald Trump however signed proclamations granting a select number of countries exemptions until June 1, Bloomberg reported. These countries include the European Union, Mexico, South Korea, Australia, Argentina, Brazil and Canada.

The US is imposing a 10% ad valorem tariff on imports for aluminium products and 25% ad valorem tariff on imports for steel.

Davies had made two written submissions to the US and the SA Ambassador to the US Mninwa Mahlangu also engaged with the White House National Security Council Staff, State Department, the Office of the US Trade Representative and Commerce Department on the matter. Davies also had teleconferences with Mahoney and other US trade officials on March 22 and again on April 30 – when SA learnt its fate.

Similarly SA’s steel exports in 2017 only accounted for 0.98% of total US steel imports. However the exports represent 5% of SA’s production and this equates to 7 500 jobs in the steel supply chain, the department said. “SA will be disproportionately affected both in terms of jobs and productive capacity,” the department reiterated in its arguments to the US government.

The department also argued that SA is also grappling with the steel glut and has control measures in place to avoid transshipment of steel from third countries.

SA also offered to restrict its exports to a quota based on the 2017 exports level, but this was not enough to convince the US.

Collateral damage

The department also pointed out that some of the exempted countries are the “biggest” exporters of steel and aluminium to the US.

According to the department the exempted countries accounted for 58% of steel imports and 49% of aluminium imports to the US in 2017.

“South Africa is therefore not a cause of any national security concerns in the US nor a threat to US industry interests and is not the cause of the global steel glut.

“Instead, South Africa finds itself as collateral damage in the trade war of key global economies. South Africa is concerned by the unfairness of the measures and that it is one of the countries that are singled out as a contributor to US national security concerns when its exports of aluminium and steel products are not that significant,” the DTI said.

The department raised concerns about the impact this decision will have on the competitiveness of SA steel and aluminium products in the US. The department believes it is likely to displace SA products out of the US market in favour of the exempted countries.

“South Africa is also concerned that the measures are implemented in a way that contravenes some of the key WTO (World Trade Organisation) principles.”

The department said it remains open to engage with US authorities to find a “mutually acceptable” outcome and encouraged domestic exporters to continue to engage with US buyers.